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Stock Borrowing Agreement for the United Kingdom

Stock Borrowing Agreement Template for England and Wales

A Stock Borrowing Agreement is a legally binding contract governed by English and Welsh law that establishes the terms and conditions under which one party (the lender) agrees to lend securities to another party (the borrower) in exchange for collateral. The agreement covers crucial aspects including delivery mechanisms, collateral requirements, rights to corporate actions, termination events, and default procedures. It incorporates regulatory requirements from the Financial Services and Markets Act 2000 and relevant FCA/PRA regulations.

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Stock Borrowing Agreement

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What is a Stock Borrowing Agreement?

The Stock Borrowing Agreement is essential for financial institutions engaged in securities lending transactions under English and Welsh law. It is commonly used when parties need to facilitate short selling, cover settlement failures, or support market-making activities. The agreement details the terms of securities loans, collateral requirements, corporate action rights, and default procedures, while ensuring compliance with UK financial regulations including FSMA 2000 and FCA requirements. It typically follows market standard documentation while allowing for customization based on specific party requirements.

What sections should be included in a Stock Borrowing Agreement?

1. Parties: Identification of the lender and borrower, including registration details

2. Background: Context of the agreement and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Loans of Securities: Core provisions regarding the borrowing and lending of securities

5. Delivery and Return: Terms for delivery and return of borrowed securities

6. Collateral Requirements: Provisions regarding posting and maintaining collateral

7. Rights and Obligations: General rights and obligations of both parties

8. Events of Default: Definition and consequences of default events

9. Termination: Provisions for ending the agreement

What sections are optional to include in a Stock Borrowing Agreement?

1. Tax Provisions: Specific tax-related provisions for cross-jurisdictional arrangements

2. Agency Provisions: Provisions for when one party acts as agent for third parties

3. Additional Representations: Extra warranties and representations for specific regulatory or compliance requirements

What schedules should be included in a Stock Borrowing Agreement?

1. Form of Loan Confirmation: Standard form for confirming individual loans

2. Eligible Collateral Schedule: List of acceptable forms of collateral

3. Agency Annex: Additional terms for agency arrangements

4. Tax Annex: Specific tax-related provisions and procedures

5. Jurisdiction Specific Annex: Additional terms required for specific jurisdictions

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions







































Clauses

































Industries

Financial Services and Markets Act 2000: Primary legislation regulating financial services and markets in the UK, setting out requirements for authorized persons/entities

Companies Act 2006: Core legislation governing share transfers, ownership, and company registration requirements

Financial Collateral Arrangements (No.2) Regulations 2003: Regulations dealing with security interests in financial instruments and transfer of title arrangements

FCA/PRA Regulations: Regulatory framework including Conduct of Business Sourcebook (COBS) and Client Asset Sourcebook (CASS)

UK EMIR: Post-Brexit implementation of European Market Infrastructure Regulation governing derivatives and clearing

Securities Financing Transactions Regulation (SFTR): Regulation covering reporting requirements and transparency obligations for securities financing transactions

Income Tax Act 2007: Tax legislation relevant for income tax implications of stock borrowing arrangements

Corporation Tax Act 2010: Tax legislation governing corporate tax aspects of stock borrowing

Stamp Duty Reserve Tax regulations: Tax regulations concerning stamp duty on stock transfers and borrowing arrangements

Global Master Securities Lending Agreement (GMSLA): Industry standard documentation and best practices for securities lending

Market Abuse Regulation (MAR): Regulation preventing market abuse and promoting market integrity

Money Laundering Regulations 2017: Anti-money laundering requirements applicable to financial transactions including securities lending

Short Selling Regulation: Regulation governing short selling activities and related disclosure requirements

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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